Critics Pounce as Few Banks Fail EU Test

After Only Eight of 90 Lenders Flunk, Skeptics Question Rigor of 'Stress Tests'

By

David Enrich And

Sara Schaefer Muñoz

Updated July 18, 2011 12:01 a.m. ET

LONDON—European regulators, trying to douse the Continent's financial crisis, announced the long-awaited results of their banking "stress tests," but the small number of lenders that flunked the exams immediately provoked skepticism.

The European Banking Authority said eight of the 90 banks it examined fell short of the required amount of capital under the tests' simulations of a deep, two-year economic downturn. Those banks...